Following the announcement in the recent Spring Budget of plans to raise National Insurance Contributions (NIC) for the self-employed, the Chancellor Philip Hammond has announced in an open letter to Tory MPs that these plans will not now go ahead.
In the letter, the Chancellor explains that the plans breached his own party’s 2015 manifesto and that he and the Prime Minister wished to remain “compliant not just with the letter, but also the spirit, of the commitments that were made”.
He said the government has therefore “decided not to proceed with the Class 4 NIC measures set out in the Budget. We will continue with Class 2 NIC from April 2018.”
Commenting on the U-turn, Mike Cherry, National Chairman of the FSB, says that the self-employed already pay a far higher penalty for their position than is reflected in the tax system. Anthony Hilton of the The Standard adds that the U-turn shows that the tax system is broken. He says that Mr Hammond could look to restore his reputation by reforming the tax system.
The UK tax landscape has undergone some dramatic developments over the last few years and it continues to do so. This means that targeted advice based on a comprehensive understanding of your business and the tax rules which affect you is essential. At Beavis Morgan, we have extensive experience of providing specialist tax advice and planning to SME businesses and individuals.